Eskom bosses: what crisis?

LENDERS CLOSE: WILL BE ATTENDED TO ‘AFTER HOLIDAYS’

Lack of urgency is tantamount to treason at a governance level – Charl Kocks.

Eskom’s liquidity problems were parked over the holidays, as executives took leave to reconvene in the new year. Finance Minister Malusi Gigaba earlier named problems at Eskom as the biggest threat to the economy.

According to reports, Eskom’s assessment was that it would have R1.2 billion cash at the start of December and move to a R5 billion negative liquidity position by end January.

Spokesperson Khulu Phasiwe said Eskom executives would meet next week, when everyone’s back from the holidays.

Eskom has stated that it’s secured only 57% of the R57 billion funding required for the current year ending March 31 and in September/October 2017 funders said they’ve closed the taps, pending a corporate governance improvement.

Phasiwe said investors want assurance that governance issues will be dealt with, and want to see progress and a plan to address outstanding matters.

Following management deliberations, Eskom plans an overseas roadshow to give feedback to investors, but no dates have been set.

Since late 2017, a permanent Eskom board has been appointed and two suspended executives, Matshela Koko and Prish Govender, returned to duty after surviving disciplinary hearings. Public response to this hasn’t been positive.

Two more executives, Anoj Singh and Abram Masango, are still on suspension, as are three senior managers. No timelines have been set for their disciplinary hearings. A permanent CEO hasn’t yet been appointed.

Eskom has survived recently by accelerating drawdowns from a R3-billion China Development Bank loan.

Its integrated report states it had R6.25 billion in total available in committed bank facilities, as of March 31, 2017.

The R3.25 billion balance is however available for dedicated purposes only, not for general use and paying salaries.

Another pressing matter the Eskom executive must discuss, is the delay in releasing its financial results for the six months ended September 30. They were previously published in October or November.

The auditors weren’t satisfied with Eskom’s response to R3 billion of irregularities that led to a qualified report for 2016/17 and are questioning Eskom’s going concern status.

Nersa’s decision to effectively reduce Eskom’s allowed revenue from tariffs by R15 billion versus the current year and R30 billion less than Eskom applied for, has made this worse.

Phasiwe said last month the interim results would hopefully be released in the first half of January, but on Monday he admitted that no date has been set.

Phasiwe said Eskom won’t approach National Treasury for a bailout or further government guarantees.

Ratings Afrika corporate governance expert Charl Kocks said Eskom appears to be sitting back and allowing the crisis to unfold, knowing it’s “too big to fail”.

He says it is playing with fire, highly irresponsible and is tantamount to treason at a governance level.

“When things are this bad, it is all hands on deck.” Leave should be cancelled and all attention focused on solving the immediate problems, he says.